USD/JPY has continued it’s slide in early European trade, presently at 96.70.
While the JPY continues to benefit from heightened risk aversion, there seem to be a couple of other factors at play here.
There seem to be growing concerns (overblown to me) that the Chinese could be about to diversify their reserve holdings away from the greenback.
Some feel news that Japan’s FSA is to impose caps on leverage employed by margin traders is helping the JPY. Trades involving leverage of 100 to 600 times collateral have been increasing and the FSA wants to cut this back to 20 to 30 times collateral. These margin traders have recently been increasing their short yen positions. These leverage cuts would limit the traders ability to run such positions.
Technical support now lies at 96.50/55.
